ACCC weighs in on IT pricing

IT vendors, already under attack for stonewalling the Australian government’s IT pricing inquiry, have received a blunt warning from the ACCC: don’t lie about why your products are expensive in Australia.

Speaking to the Australian Financial Review, Australian Competition and Consumer Commission chair Rod Sims says the watchdog is already looking into vendors’ claims that the “Aussie tax” is due to the country’s 10 percent GST, high wages or transport costs.

It’s a move that will probably jolt the vendors far more than the parliamentary inquiry. There’s no practical way to legislate price parity across international markets – but the ACCC has considerable powers to crack down on companies that mislead the public (without needing any new legislation).

Sims told the AFR that while the usual bleating complaints from vendors might account for a 30 percent price differential, “if the price difference is 300 percent, then it’s a different matter”.

It seems the ACCC is becoming quite the activist: last week, it told the pricing inquiry that illegal downloading is a “market force” that creates competitive tension in the Australian market.

Through the Australian Information Industries Association, the vendors have already admitted that price discrimination is a strategy, stating “the practice of price discrimination is a common business strategy necessary to maximize performance” in its submission to the inquiry.

However, the AIIA is also on the public record as reaching for any-and-every possible input cost to justify vendors’ air of injured innocence.

Wiping out price discrimination is neither feasible nor desirable. To pick an example, deeply-discounted airline tickets are just another form of price discrimination (but one that works in favour of the consumer). Better information, however, puts more power in the hands of consumers – which is why the ACCC’s focus on vendors’ statements is welcome. ®